The trend estimate for total capital expenditure increased by 5.9% in December quarter 2005. It rose by 9.2% in seasonally adjusted terms after a rise (3.5%) in the September quarter 2005.

A strong increase in seasonally adjusted expenditure on equipment, plant and machinery (up 9.9%) has been the major source of growth this quarter, mainly driven by the Other selected industries and Mining.

This issue includes the fifth estimate for 2005-06 and the first estimate for 2006-07.

Estimate 5 for 2005-06 is $67,307m. This estimate is 21.0% higher than the comparable estimate for 2004-05 and 6.4% higher than estimate 4.

Estimate 1 for 2006-07 is $52,690m. This is 17.6% higher than Estimate 1 for 2005-06.

See pages 6 to 9 for further commentary on expectations data.

NOTES

FORTHCOMING ISSUES

ISSUE (QUARTER)

Release Date

March 2006

1 June 2006

June 2006

31 August 2006

CHANGES IN THIS ISSUE

There are no changes in this issue.

INQUIRIES

For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Esther Lauw on Sydney (02) 9268 4357.

ACTUAL NEW CAPITAL EXPENDITURE IN VOLUME TERMS

TOTAL CAPITAL EXPENDITURE

The trend estimate for total new capital expenditure increased 5.9% in December quarter 2005, the fourth consecutive quarter of similar growth. The seasonally adjusted estimate increased 9.2% primarily due to an increase in equipment, plant and machinery of 9.9%.

BUILDINGS AND STRUCTURES

The trend estimate for buildings and structures increased 5.1% in December quarter 2005, the growth rate slowing after two consecutive quarters of strong growth. In seasonally adjusted terms, the estimate increased 6.6%. The increase this quarter is driven by Mining, up 11.9%.

EQUIPMENT, PLANT AND MACHINERY

Trend estimates for equipment, plant and machinery have increased by 5.8% in December quarter 2005, the eighth consecutive rise. The December quarter estimate, in seasonally adjusted terms, rose strongly by 9.9%. Mining and Other selected industries rose 21.4% and 14.0% respectively, with Construction and Transport and storage industries being the main contributors in Other selected industries.

MINING

The trend estimate for Mining increased by 12.7% in December quarter 2005, the fourth quarter of consecutive growth. The seasonally adjusted estimate increased 16.0%, maintaining the strong growth seen in the previous two quarters. Equipment, plant and machinery is the main contributor, with 21.4% seasonally adjusted growth and buildings and structures recording a 11.9% increase.

MANUFACTURING

Manufacturing trend estimate increased 4.2% in December quarter 2005, the seventh consecutive quarter of growth. In seasonally adjusted terms, the estimate fell 1.3% after experiencing very strong growth in September quarter 2005. Equipment, plant and machinery is the main contributor to the fall, down 3.0% in seasonally adjusted terms.

OTHER SELECTED INDUSTRIES

Trend estimate for Other selected industries increased 3.9% in December quarter 2005. In seasonally adjusted terms, Other selected industries rose strongly (11.4%) following a fall last quarter of 4.6%. The increase was mainly due to an increase in equipment, plant and machinery expenditure of 14.0%.

ACTUAL AND EXPECTED NEW CAPITAL EXPENDITURE

FINANCIAL YEARS AT CURRENT PRICES

The graphs below show the seven estimates of actual and expected expenditure for each financial year. The estimates appearing below relate to data contained in tables 5 and 6. Advice about the application of realisation ratios to these estimates is in paragraphs 24 to 27 of the Explanatory Notes.

The timing and construction of these estimates are as follows:

TOTAL CAPITAL EXPENDITURE

The fifth estimate for 2005-06 is $67,307m which is 21.0% higher than the comparable estimate for 2004-05 and 6.4% higher than the fourth estimate for 2005-06. All industries recorded increases with Mining (8.7%) recording the largest increase. The first estimate for 2006-07 is 17.6% higher than the corresponding estimate for 2005-06. The increase was mainly driven by Mining, although most other industries also report higher expectations for next financial year.

BUILDINGS AND STRUCTURES

Estimate 5 for 2005-06 is 29.9% higher than Estimate 5 for 2004-05 and 5.0% higher than Estimate 4. All industries have increased since Estimate 4 for this financial year. Mining and Manufacturing recorded the strongest increases.

Estimate 1 for 2006-07 is 36.3% higher than Estimate 1 for 2005-06. The majority of industries have increased although Manufacturing, Wholesale trade, Transport and storage, and Finance and insurance are all lower than Estimate 1 for 2005-06.

EQUIPMENT, PLANT AND MACHINERY

The fifth estimate for 2005-06 is 16.0% higher than the comparable estimate for 2004-05 and 7.4% higher than Estimate 4 for 2005-06. Increases in Transport and storage, Manufacturing, and Property and business more than offset the lower estimate for Finance and insurance.

The first estimate for 2006-07 is 6.2% higher than the first estimate for 2005-06. Most industries have increased, but Retail and Transport and storage industries are lower than estimate 1 for 2005-06.

MINING

Estimate 5 for 2005-06 has increased by 43.0% compared to Estimate 5 for the 2004-05 year and is 8.7% higher than Estimate 4 for this financial year. The Mining industry continues to have strong growth in expectations this quarter due to increased expectations for both equipment, plant and machinery and buildings and structures.

The first estimate for 2006-07 for Mining is 58.3% higher than Estimate 1 for 2005-06 with expectations remaining at high levels in both asset groups.

MANUFACTURING

Estimate 5 is 20.6% higher than the comparable estimate for 2004-05 and 3.6% higher than Estimate 4 for 2005-06. The main contributor to growth in Estimate 5 was expenditure on equipment, plant and machinery (up 7.5%).

Estimate 1 for 2006-07 is 6.1% higher than the comparable estimate for 2005-06. An increase of 10.8% in equipment, plant and machinery was slightly off set by a decrease of 4.9% in buildings and structures.

OTHER SELECTED INDUSTRIES

Estimate 5 for 2005-06 is 13.5% above the corresponding estimate for 2004-05 and is 6.7% higher than Estimate 4 for this financial year. Equipment, plant and machinery is contributing to the majority of this growth, with Property and business services and Transport and storage showing increases on Estimate 4.

The first estimate for 2006-07 is 6.2% higher than Estimate 1 for 2005-06. All industries except for Transport and storage have increased.

EXPERIMENTAL PROJECTED CAPITAL EXPENDITURE

IN CURRENT PRICE TERMS

PROJECTED CAPITAL EXPENDITURE SERIES

The projected series below apply historical realisation ratios to contemporary expectations to convert these to quarterly figures. Trend estimates of resultant quarterly time series of actual and expected expenditure are produced.

The following graphs, with accompanying commentary, show the projected capital expenditure series based on December quarter 2005 data, which includes expected expenditure up to and including the June quarter 2007. Please see paragraphs 28 to 32 of the Explanatory Notes for further details about the methodology and cautionary notes for these series.

TOTAL CAPITAL EXPENDITURE

Current price trend estimates for total capital expenditure have increased sharply since 2004-05. Expectations for the next eighteen months suggest a flattening of capital expenditure. With the exception of Mining, capital expenditure is projected to decline over 2006-07 for all major industry groups.

BUILDINGS AND STRUCTURES

In current price terms, trend estimates for buildings and structures have displayed sustained growth over the past three years. The expectations for the next eighteen months suggest a period of levelling in growth over the coming months, followed by steady growth for the 2006-07 financial year.

EQUIPMENT, PLANT AND MACHINERY

Current price trend estimates for equipment, plant and machinery, have shown strong growth since the beginning of the 2004-05 financial year. Expectations for the next eighteen months suggest a decline towards the end of the 2005-06 financial year. All major industry groups are projected to decline with the strongest decline coming from Mining which is projected to decline for the first three quarters of 2006 followed by a resumption of growth in the latter part of 2006-07.

MINING

Trend estimates for Mining have increased strongly since the September quarter of 2004. Estimates suggest a flattening of expenditure towards the end of the 2005-06 financial year followed by growth. Equipment, plant and machinery is expected to decline before increasing again from December quarter 2006. Strong growth for buildings and structures should flatten towards the end of the 2006-07 financial year.

MANUFACTURING

Manufacturing trend estimates have shown strong growth since the 2004-05 financial year. Expectations suggest expenditure has peaked and will fall for the remainder of this financial year, followed by a flattening of spending for 2006-07. Both asset groups are expecting a decline, with buildings and structures expecting growth from the March quarter 2007.

OTHER SELECTED INDUSTRIES

The current price estimate for Other selected industries have shown strong growth since March quarter 2005. Estimates suggest that growth is expected to peak toward the end of 2005-06 financial year, followed by a decline. Growth for buildings and structures will continue for the next eighteen months, while a decline in equipment, plant and machinery is expected from the September quarter of 2006, mainly driven by Transport and storage.

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